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The National Electricity Market (NEM) is a wholesale market for the supply and purchase of electricity.
It is managed by the National Electricity Market Management Company (NEMMCO) under the oversight and control of the Australian Energy Market Commissions (AEMC) and the Australian Energy Regulator (AEC).
Queensland, NSW, the ACT, Victoria, Tasmania and South Australia are interconnected and all participate in the national market.
As a wholesale electricity generator, Delta competes against generators in NSW and other states for the supply of electricity into the central pool.
Generators offer to supply the market with different amounts of electricity at particular prices for each half hour of the day. NEMMCO dispatches generators based on their bid prices. Electricity retailers purchase electricity from the pool to meet their customers’ electricity demand. All generators must sell their electricity into the pool and all electricity retailers must purchase their electricity from the pool.
Pool price varies according to available generating capacity and electricity demand (weather has a big influence with very hot days and cold nights boosting demand).
To minimise the risk of volatile pool prices, market participants buy and sell electricity hedge contracts, which provide price certainty for fixed quantities of electricity. Contracts can be sold between generators and retailers.
There are also some intermediaries, such as brokers and banks, who trade with the market participants. |
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